Ukraine International Airlines adds new Boeing 737-300s

Published: 6/9/1999

Ukraine International Airlines (UIA) has just added a brand new Boeing 737-300 aircraft to its fleet, joining the company"s four other Boeings. This new plane is the first to be specially constructed by Boeing to UIA"s specifications. The company is financing the aircraft through a long-term leasing contract from Austrian Lease and Financing Company. One of Ukraine"s three domestic airlines with international flights, UIA was formed soon after independence in 1992. While Ukraine had inherited part of the Soviet Union"s Aeroflot fleet after independence, many of the planes could not fly outside eastern Europe. Those that could failed to meet the standards expected by foreign, cash-paying customers. As a result, the Association of Civil Aviation of Ukraine agreed a deal with Guinness Peat Aviation to acquire new planes. This led to the creation of UIA as a joint venture between the State Property Fund (SPF) and Guinness Peat. According to Mr Yury Miroshnikov, Senior Vice President of UIA, the company"s strategy from the outset has been to operate on the most competitive western European routes. UIA initially flew from Kyiv Borispol to London Gatwick with two leased Boeing 737-400s. When these proved too large for the company"s needs, they sized down to two 737-300s. As UIA has grown, it has added more planes, and today has a fleet of three 737-300 craft and two 737-200 planes for international flights. These 737s are medium-range aircraft with a range of 2,500 kilometres or less, and are the most appropriate for UIA"s market. The company uses a YAK 40 for domestic flights to connect passengers with international services. In addition, it has an Antonov An-12 for freight deliveries. As it expanded, UIA added routes to Frankfurt, Vienna and Paris. It has also sought new investment. Today, UIA is 68% owned by the SPF, while GEAC (which acquired GP), Austrian Airlines and Swiss Air own the remainder. UIA now flies to nearly all the major European capitals and connecting hubs: Frankfurt, Paris, Vienna, Zurich, Amsterdam, and London. From these destinations, passengers can continue on to any of nearly 3,000 destinations. UIA also flies to some secondary destinations, such as Brussels, Rome and Barcelona. Mr Miroshnikov claims that this allows UIA to satisfy demand for air transportation both through direct flights, and by taking passengers to connecting destinations for other flights. UIA"s cargo flight flies to the international cargo hub in Luxembourg and to Amsterdam. In a fiercely competitive market, safety and comfort are key factors. Mr Miroshnikov concedes that: “We were targeting Western customers with this type of aircraft, but it turns out Ukrainian customers are also quite sensitive. We got feedback from them that it"s very important for them to fly on safe and comfortable flights". UIA"s maintenance engineers are trained either by Boeing or by CFMI, the company that produces the engines for the planes. The aircraft-maintenance program has been audited and verified by the Civil Aviation Authority of Ukraine and the international aviation standards authority, Bureau Veritas. At Borispol, UIA"s engineers currently carry out the pre-flight and support maintenance for Air France, British Airways, KLM and Malev. UIA is also investing heavily in pilot training, spending nearly $100,000 on each pilot for training in either Phoenix or London. All the company"s flights have separate economy and business class cabins, but the planes have been modified to allow flexibility. The number of seats in each class can be changed, and charter flights can be modified for full economy seating. The flights also feature an expanded galley and, for the Ukrainian market, an extra-large bar. As Mr Miroshnikov remarks: “We need to have a lot of drinks on board for Ukrainian customers." In addition to Western drinks, flights stock Ukrainian beers and spirits, which are apparently very popular with customers who want something familiar and reassuring while cruising at 32,000 feet. The expanded galley will this year offer a selection of 36 national dishes prepared for UIA by Ukrainian company Kyiv Catering. UIA has promised that business class diners will eat off fine Ukrainian bone china, with elegant cutlery and starched linen. The company may need to invest in perks like these in the battle for market share. According to Mr Miroshnikov, the average passenger load is only around 50% of capacity. In the current economic climate, few Ukrainians can afford to fly, and few foreign investors are attracted to Ukraine. The company has postponed plans for a Kyiv-Milan route, as well as its intended expansion to Scandinavian countries. The downturn has also affected UIA"s cargo business, which accounts for 10% of the company"s revenues. Each UIA Boeing can carry up to 3 tons of freight, and the Antonov An-12 flies twice weekly to Luxembourg. Exports have remained stable, but imports have declined severely. Mr Miroshnikov acknowledges that the company needs to build stronger partnerships with other airlines. “In spite of all our efforts to participate in major distribution systems our competitors - which are old, established companies - have the advantage," he said. UIA does have code-sharing deals with Austrian Airlines and Swiss Air, and has signed cooperation agreements with other airlines. Despite the downturn, the airline still hopes to expand, with more frequent flights to Vienna and Zurich in the pipeline. Mr Miroshnikov emphasises that: “We are a young, six-year-old airline, and we have some more growing to do".

Article ID: 570